This Is The S&P 500 Level You Must Watch Now

The stock market got wildly overbought at the start of this month, after its big first quarter rally from the December low. As a result, it has been pulling back for the past few weeks. As that pullback has happened the Trump/China trade negotiations broke down and we have seen a few big up and down days in the market that get all of the attention while people miss the fact that things started to roll over at the start of this month.

Most people don’t think this is much to worry about with people in the financial media asserting that a trade deal must happen or see an up day after a down day and then yell that you must buy because it could go up again tomorrow.

Extreme overbought market signals like we had on the first of May are warnings to wait before making news buys so that you can let the market work off the increased risks of buying into a top by letting it consolidate or pullback first.

I don’t chase news stories and daily market swings and believe that now is the time for people to return to the basics of trading and technical analysis and even examine the work of the originators of this like Charles Dow and not think just doing nothing and hoping for robots to carry things up forever for them will work anymore from here – or expecting a trade miracle.

There are ways to profits on this market. Last week I talked about a bet I made against Tesla stock and TSLA dumped over 7% on Friday.

Other stocks are starting to fade already. A month ago these weaker laggard stocks were starting to hold up, but now they are fading again. For instance look at NVDA.

NVDA is resuming its role as a dead money stock market laggard. Notice how the NVDA/SPX ratio is still trending down and how the stock broke last week.

MU is another popular stock that has now rolled over.

Both NVDA and MU are among many stocks that fell much worse than the S&P 500 did when it declined 20% last year and then bounced hard in the first three months of 2019, but have now rolled over. Such stocks are likely to now lead again to the downside and could even fall if the S&P 500 simply were to go sideways this summer.

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